European stocks will bounce back

The pan-European FTSE Eurofirst 300 index has fallen by around 7.4% so far this year, while US stocks have hit new record highs. Can European stocks rebound?

This was supposed to be Europe's year. A steadily improving economy and further stimulus from the European Central Bank was expected to give stocks a boost. Not for the first time, however, the pan-European FTSE Eurofirst 300 index has disappointed. It has fallen by around 7.4%, while US stocks have ticked up to new record highs.Can European stocksrebound?

A key problem is that "chronically optimistic" earnings estimates for 2016, published at the beginning of the year, have had to be revised downwards again, says the FT's Richard Blackden. Already low expectations for this summer's earnings season "have been dragged lower still by Brexit", with bank profits in particular taking a hit. They were already under pressure due to negative interest rates and fears that they had too little capital especially in Italy. Now a potential economic downturn has clouded the outlook further.

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Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.